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        <title>Real Estate Blog</title>
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            <guid>http://www.gobrock.com/blog/sacramento-short-sales.html</guid>
            <link>http://www.gobrock.com/blog/sacramento-short-sales.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>Sacramento Short Sales</title>
            <description> <![CDATA[ 
What is a short sale?


Short sales occur when property values have dropped, and the homeowner is unable to sell the property for enough to pay off the debt owed.  A short sale is when a lender allows the homeowner to sell the home for less than what is owed on the mortgage note.  Typically, a lender would rather pursue a short sale and lose less money, as opposed to taking the property back through foreclosure.


 


FOR BUYERS: Advantages of a short sale






A buyer may have an opportunity to purchase a property below current market value (Not guaranteed).  Most lenders require at least 90% of the current market value for the home, so buyers have a chance to purchase a property at a discount of up to 10%.






The condition of the home is usually better than that of a foreclosure.  Extensive vandalism and damage may occur more frequently on a foreclosure.






Since a property owner is responsible for the condition of the property until title is transferred, it is less likely that vandalism will take place.  






FOR BUYERS: Disadvantages of a short sale






TIME – Short sales can take a considerable amount of time to complete.  Some Sacramento short sales can receive approval in 6-8 weeks, but most take 90 – 120 days or more.  A buyer is at risk of investing time in a short sale, only to have the deal fall apart as there are no guarantees.  Even though a lender has agreed to do a short sale, it does not guarantee final approval.






MONEY – A seller that is near foreclosure will rarely have the means to keep up the maintenance of the home, nor make any requested repairs.  Short sales are sold “As Is”.






Neither the lender nor the seller will pay for items normally covered in a traditional sale.  This includes things like: pest/termite inspections, home protection plans, etc.






SECOND MORTGAGES – If there are two loans against the property, this could pose a problem for a potential buyer.  The lender in first position always has first priority.  Depending on the sale price of the home, the second lender may not receive anything at all.  Therefore, the second lender may not agree to a short sale.  The first lender will need to give something to the second, or it will prevent the short sale approval.  Either way a buyer can expect further delay in order to satisfy the demands of the second lender.






SELLER MOTIVATION – As a buyer looking at short sales, you may start to see homes that have been sitting on the market for extended periods of time without offers.  Usually these listings will have restricted showing times that may seem unreasonable.  As agents, sometimes we come across other agents who have little or no communication with the sellers of their short sale listings.  This is normally because once a seller realizes the implications a short sale will have on his/her credit, their living situation, and their future, they can become uncooperative with the process.  A buyer will need to remember that these are people who are essentially losing their homes.  Most of them have no intentions of ever buying a home again, at least in the foreseeable future.  This type of attitude is self-defeating, but understandable.  This will cause even more delay in the process.  A seller stands to make nothing on a short sale.






 


Why do banks grant short sales?


A short sale is granted for 2 reasons:


1.)    Seller Hardship:






Loss of employment






Reduced Income






Medical Emergencies






Divorce






Bankruptcy






Death






 


2.)    Declining property value:






Lenders are aware of the decline of property values.  They know that the seller owes more than what the home is worth.  A foreclosure is more costly for a lender in the long run






 


FOR BUYERS: The short sale process


The following steps are what a buyer might expect after they have written their offer and the seller has accepted:


1.)    Offer package is submitted to the bank.  The package will not only include the buyer’s purchase agreement, prequal letter, and earnest money deposit, but will include a complete financial package from the seller.  The seller financial package will have things like:






CMA (Comparative Market Analysis) with a list of recent comparable sales.






Seller’s hardship letter






2 years tax returns






2 years of W-2’s






Recent payroll stubs






Recent bank statements






Letter of authorization so the listing agent is able to communicate with the lender during the short sale






HUD -1 (Preliminary net sheet)






2.)    Bank acknowledges receipt of the package.  This can take anywhere from a week to a month, or more.


3.)    A short sale negotiator is assigned and a BPO is ordered (Broker’s Price Opinion).  This can take 30 – 60 days, and more than likely the bank will not      share the results of the BPO.


4.)    The file is sent off for review to the lienholder.  This can take another 30 days.


5.)    The bank may have all parties involved sign an Arm’s Length Affidavit.


6.)    The bank issues a short sale approval letter.  It will include the approval price, and a specific time frame for the buyer to close escrow.


7.)    Buyer begins their loan process, and hopes they can close on time.


Throughout the whole process, buyers can become impatient and frustrated.  Often times they cancel midway through the process to pursue other properties.  The agent is then left to put the house back on the market to procure a new buyer, and start the process over again.


 


CAUTION:


There are always unknowns and surprises that arise in the short sale process.  Every bank has a different protocol when processing short sales.  Therefore timelines will vary.  Some things a buyer should consider are:






A short sale might seem like a good deal at first, but often times this may not turn out as the buyer originally expected






A buyer should not assume that just because a lender is already willing to take a loss on a short sale, that they will consider low ball offers.  Buyers beware that a low offer can be rejected instantly by the bank.






Be aware of properties that are listed below fair market value.  The actual price of the short sale may have nothing to do with the current market value; in fact, they are priced low in order to generate multiple offers.  






Remember that just because a seller has accepted a buyer’s offer, it does not mean that the bank will approve the short sale.






A buyer may have to spend money out of his/her own pocket for inspections, appraisals, or repairs in order to satisfy the requirements of their loan.  The seller and/or bank will not pay for any repairs, the home is sold strictly as-is on a short sale.






Although the short sale process has become more streamlined over the past couple of years, remember that each bank has its own short sale procedure.  Experienced Real Estate Agents may not be able to accurately predict the bank timelines and requests.






 


TIPS FOR BUYERS:






It is important to hire an agent with experience in short sales in order to protect your interests, and expedite the process.






It is best if your agent sends a list of current and accurate comparable sales with your offer to support the price you are offering on the home.






Indeed it is possible to buy a short sale below market value.  However, keep in mind that the bank knows what the home is worth.  Don’t expect a discount more than 10% of the fair market value.






It is important for your agent to call the listing agent regularly for status updates on the short sale.  Careful notes should be taken during the whole process.






The value of the home is based on recent comparable sales, not what is owed on the mortgage.






Banks will approve short sales based on the hardship of the seller, and the current value of the home.






It is a good idea for a buyer to look for short sales that are already approved by the bank.  This happens when a buyer is in place for the majority of the process, and then backs out when there is an approval from the bank.  Most of the leg work has already been done, and there is an opportunity for another buyer to step in.






Understand the risks involved with short sales before you decide to pursue one.  Speak with your agent, weigh your options, and really think about whether or not you can handle the process.






BE PATIENT!  Put your offer in and forget about it!  Don’t continue to look at other short sales and put in offers all over the place.  Not only are you putting all of those sellers at risk of foreclosure should you cancel, but you are possibly lengthening an already lengthy process for yourself.




 ]]> </description>
            <pubDate>Fri, 03 Feb 2012 17:53:53 -0800</pubDate>
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            <guid>http://www.gobrock.com/blog/foreclosure-filings-down.html</guid>
            <link>http://www.gobrock.com/blog/foreclosure-filings-down.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>Foreclosure Filings Down</title>
            <description> <![CDATA[ 
Foreclosure filings and repossessions fell to their lowest level since 2007 last year.


Totalfilings, including default notices and bank repossessions were down 33% for theyear to 2.7 million, according to RealtyTrac, the online marketer of foreclosedproperties.


Onein every 69 homes had at least one foreclosure filing during the year, while 804,000homes were repossessed. That's a significant improvement from the peaks reachedin 2010 -- when 1.05 million homes were repossessed -- and the lowest levelsseen since 2007.


More than 4 million homes have been lost to foreclosure over the past five years.


While the declines seem like good news for the housing market, where a flood offoreclosed homes has depressed home prices, much of it is due to processingdelays caused by fall-out from the "robo-signing" scandal that brokein late 2010.


During the year, banks spent more time making sure paperwork was legal and proper,creating a backlog in the foreclosure pipeline. As a result, the average timeit took to process a foreclosure climbed to 348 days during the fourth quarter,up from 305 days a year earlier. 


"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosureactivity for the year," said Brandon Moore, chief executive officer ofRealtyTrac.


However, Moore said there were "strong signs" during the second half of theyear that lenders are working through foreclosure backlogs in certain markets.He expects foreclosure activity to rise above 2011's level but remain below thepeak hit in 2010.
 ]]> </description>
            <pubDate>Sat, 21 Jan 2012 07:40:38 -0800</pubDate>
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            <guid>http://www.gobrock.com/blog/my-first-blog-entry.html</guid>
            <link>http://www.gobrock.com/blog/my-first-blog-entry.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>California Home Sales Slump 5.8%</title>
            <description> <![CDATA[ 
Sales of existing single-family homes in California fell 5.8 percent from April to May to a seasonally adjusted annual rate of 471,480 units, according to statistics collected by the California Association of Realtors from 90 Realtor associations and multiple listing services.


That's a 14.4 percent decline in sales from the same time a year ago, when federal homebuyer tax credits were still in effect.


At $291,760, the median sale price of existing single-family homes in California during May was down 0.7 percent from April and 10.9 percent from a year ago.


"The monthly decline in sales and the median home price reflect the slowdown in the economic recovery over the past couple of months, which has affected virtually all aspects of consumer spending," said CAR Chief Economist Leslie Appleton-Young in a statement.


 
 ]]> </description>
            <pubDate>Fri, 22 Jul 2011 14:27:14 -0700</pubDate>
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